Why Yahoo, Intel, Cree, Intuitive Surgical, and More Are Making Headlines

Traders are watching crude today after yesterday’s API report showed a surprise draw of 3.8 million barrels versus expectations of a build of 2.4 million barrels.

Among the securities that traders are also watching are Yahoo! Inc. (NASDAQ:YHOO), Intuitive Surgical, Inc. (NASDAQ:ISRG), Cree, Inc. (NASDAQ:CREE), Intel Corporation (NASDAQ:INTC), and Interactive Brokers Group, Inc. (NASDAQ:IBKR), as each just reported their latest quarterly results. Let’s take a closer look at their earnings reports and see how successful hedge funds have been trading these stocks.

At Insider Monkey, we track around 750 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on, can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see the details here).

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Although it might not matter if the Verizon Communications Inc. (NYSE:VZ) deal goes through, Yahoo! Inc. (NASDAQ:YHOO) reported solid results for its third quarter, with EPS of $0.20 on sales of $1.31 billion, versus the Street’s estimate of $0.14 and $1.31 billion respectively. Sales rose by 6.5% year-over-year, led by a 24.2% jump in mobile, video, native and social sales. Mobile sales also surged by 46.1% to $396 million. In terms of guidance, Yahoo’s management expects adjusted EBITDA of $810 million-to-$850 million and adjusted income from operations of $300 million-to-$340 million for the full year. Jeffrey Smith‘s Starboard Value owned 12.29 million shares of Yahoo! Inc. (NASDAQ:YHOO) at the end of June, good for 16.34% of the value of the activist fund’s public equity portfolio at that time.

Traders are watching Intuitive Surgical, Inc. (NASDAQ:ISRG) after the advanced medical equipment maker reported third quarter EPS of $6.19 on revenue of $682.9 million, which came in $1.06 and $32.41 million ahead of the consensus estimates respectively. Revenue for the quarter jumped by 15.8% year-over-year as Da Vinci shipments rose by 16.5%, coming in at 134. For its 2016 fiscal year, the company expects its procedure growth to be at the high end of its previous 14%-to-15% range. Of the 749 hedge funds that we track which filed 13Fs for the June quarter, 31 funds owned $1.11 billion worth of Intuitive Surgical, Inc. (NASDAQ:ISRG) shares on June 30, up from 27 funds with $1.09 billion in holdings on March 31.

On the next page we’ll examine the latest earnings reports from Cree, Intel, and Interactive Brokers Group.

Cree, Inc. (NASDAQ:CREE) is in the red after the company turned in a soft fiscal 2017 first quarter. For the period, Cree earned $0.09 per share, missing the Street’s estimate by $0.02. Revenue came in at $321 million, down by 15.7% year-over-year, and also below the consensus mark, by $1.77 million. Gross margin was 26.9% for the three-month period, down from 28.1% a year earlier. Cree expects adjusted EPS of $0.13-to-$0.19 on revenue of $360 million-to-$380 million for its fiscal second quarter. 11 funds in our database had a long position in Cree, Inc. (NASDAQ:CREE) at the end of June, down by six funds from the end of March.

Although it handily beat third quarter expectations, Intel Corporation (NASDAQ:INTC) has fallen by 5% in extended trading due to soft guidance. For the third quareter, the semiconductor maker earned $0.80 per share on revenue of $15.78 billion, beating the Street’s expectations of $0.72 per share in earnings and $15.58 billion in revenue. Sales rose by 9.1% year-over-year as the sales from its Data Center Group increased by 10% and revenue from Internet of Things surged by 19%. Adjusted gross margin clocked in at 64.8%, up by 0.3 percentage points from the third quarter of 2015. In terms of outlook, Intel is predicting fourth quarter revenue of $15.7 billion +/- $500 million, and adjusted gross margin of 63% +/- a couple of percentage points. The number of funds that we track with long positions in Intel Corporation (NASDAQ:INTC) rose by three during the second quarter to 57 at the end of June.

Interactive Brokers Group, Inc. (NASDAQ:IBKR) earned $0.30 per share for its third quarter, missing the average analyst estimate by $0.04. Revenue for the period was $345 million, down by 3.9% year-over-year, and $6.79 million below the Street’s consensus estimate. A big reason for the miss was lower trading activity, perhaps due to the lack of fear in the marketplace, as total DARTs declined by 11% to 609,000. Nevertheless, if interest rates normalize and/or the industry consolidates, Interactive Brokers is likely to benefit. 30 funds in our database were long Interactive Brokers Group, Inc. (NASDAQ:IBKR) at the end of June.

Disclosure: None